Crown Books to cut back Landover retailer names 5 Md. outlets among 79 it is closing

Lost $48.7 million in 1997

Bankruptcy court OK is needed to shut low-performing units

Publishing

August 04, 1998|By Lorraine Mirabella | Lorraine Mirabella,SUN STAFF

Crown Books Corp. will close five Maryland stores as part of a bankruptcy reorganization that calls for shutting down nearly half the bookseller's outlets nationally.

The Landover-based discount retailer, a 1980s success story overcome this decade by competition from huge booksellers, said yesterday that it will close 79 of 174 stores and pull out of Philadelphia, Seattle and Texas altogether.

The struggling company, which filed for Chapter 11 bankruptcy protection July 14, hopes to stabilize its finances by shedding stores that failed to meet the company's profit requirements. Crown lost $48.7 million last year.

"We're trying to prune back to a profitable base, so that we can go forward and look to future growing," said Steve Pate, Crown's vice president of operations.

Crown, which has 14 stores in Maryland, will close locations in Columbia; on Main Street in Annapolis; and in Olney, Kensington and Silver Spring, Pate said. The company first needs approval of the U.S. Bankruptcy Court in Delaware, which Pate said it expects within a couple of weeks.

Besides ridding itself of weaker stores, the retailer is pinning hope for recovery and growth on a new store design and layout that Anna Currence, Crown's president, has been working on since taking over in January. Pate offered no details on the new format.

"Once we get back to a growth mode, we will unveil it," he said.

Crown Books is controlled by Dart Group Corp., which was acquired in May by Richfood Holdings Inc., a grocery wholesaler based in Richmond, Va.

Richfood, which purchased Dart primarily to acquire its Shopper's Food Warehouse, has said it intends to sell all of Dart's non-supermarket subsidiaries, including Crown.

A tentative deal to sell the book chain to First Lincoln Holdings Inc., a New York financial investment company, fell through, but Richfood is negotiating with other potential buyers, Pate said.

The brainchild of former Dart President Robert Haft, Crown was the first national discount bookstore chain. The retailer found a niche in the 1980s by opening stores in neighborhood strip shopping centers, offering a wider selection and a more convenient alternative to mall bookstores. The chain grew to 250 stores.

But the retailer failed to heed changing trends in the book business. It also was shaken by management turmoil stemming from the Haft family feud that began when founder Herbert H. Haft fired his son, Robert, in 1993 as president of the retail company.

Meanwhile, Borders Group Inc. and Barnes & Noble Inc. launched huge bookstores with vast inventories, cafes and entertainment that began grabbing increasingly larger shares of the market and leading to the closing of hundreds of small booksellers around the nation.

Sales at the two large booksellers this year are expected to account for up to 28 percent of the $17.5 billion domestic consumer book market, said Jason T. Klein, an equity analyst with Blackford Securities in Garden City, N.Y.

"Crown has been a weak player in the business for quite a while now," Klein said. "Most of their stores do have competition from Barnes & Noble or Borders.

"The customer comes in, and they don't care if you have 15 copies of the latest John Grisham book. If you don't have one copy of the book they want, you won't make a sale."